Boseto completed within budget & ramping up as planned
By 30 June 2012, DML had produced 552t of concentrate grading 30% copper and
500g/t silver and sold its first concentrate shipment. Steady state operation at design
rates is expected to be achieved at Boseto by the end of July 2012. Commissioning
will continue through to the end of September 2012. The Boseto project was
completed within budget. At 30 June 2012, DML had cash of US$59.3m, having fully
drawn debt finance of US$180m and a US$25m working capital facility. We’ve made
no changes to our earnings estimates or recommendation as a result of this report.
Exploration success continues
On 20 July 2012, DML announced that drilling to depths of around 170m at the Mango
prospect had intersected the thickest high grade copper-silver mineralisation
discovered to date. Mango within 25km of the Bosteo concentrator and has the
potential to support an expansion of the existing project or new project development.
Significant results included: 33m at 1.1% Cu, 13g/t Ag; 23.9m at 1.4% Cu, 17g/t Ag;
19.6m at 1.4% Cu, 8g/t Ag; 17m at 1.3% Cu, 16g/t Ag; and 20m at 1.1% Cu, 11g/t Ag.
Investment thesis – Buy, Target Price $1.90/sh
We expect DML to re-rate as the Boseto project is commissioned and reaches its
design rates of production. DML is scheduled to update its resource and reserves
estimates by the end of 2012. An expanded resource could support the expansion of
DML’s copper production from 36ktpa to >50ktpa rates. DML has a large, highly
prospective, tenement package (11,000km2) in the Kalahari Copperbelt in Botswana.
Our target price of $1.90/sh is the average of our base case (36ktpa) and upside case
(50ktpa) valuations.
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